Meritor Forecasts Electrification Will Bring $1.5 Billion in Revenue by 2030
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Meritor Inc. announced several new business awards that expand its role in vehicle electrification, including the medium-duty segment, and broaden its global reach to offset the cyclical North American truck market, its largest customer base.
While Meritor sells 70% of the rear axles in the North American truck market, mostly for Class 8s, which accounts for 75% of its sales, it is preparing for another number — $1.5 billion in new revenue from electrification by 2030; fiscal year 2021 revenue was $3.8 billion.
It is intent on becoming an ePowertrain provider, not just an axle manufacturer.
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“We have three to four times the content opportunities with full integration of motor and transmissions into our ePowertrain,” Meritor CEO Chris Villavarayan said during the company’s Strategy Day virtual presentation Dec. 7.
The Troy-Mich.-based company forecast an elongated global truck cycle running through 2025 with North American Class 8 backlog near industry records, and that will benefit its core business of axles and brakes, providing cash flow to support its electrification efforts. As for electrification, the company sees the shift “moving to Meritor’s real estate,” noting 50% of its ePowertrain content derives from its legacy products, such as gears and brakes.
The company reported its 14Xe ePowertrain is available and will begin production in December. It is part of Meritor’s Blue Horizon advanced technology portfolio.
The 14Xe ePowertrain, produced at Meritor’s manufacturing facility in Asheville, N.C., is based on Meritor’s proven 14X axle housing, to maintain existing axle mounting hardware for ease of truck maker integration. The modular design enables the interchangeability of key components, including electric motors, transmissions, gearing, brakes, wheel ends and housings to adapt to customer specifications. It can be adapted to fit various powertrain needs based on vehicle application and duty cycle spanning Classes 5-8 commercial vehicles, according to the company.
“We are well-positioned to capitalize on growing electric vehicle adoption, particularly in markets where we have much growth opportunity, like medium-duty, which will be the first to adopt based on e-commerce and the change in market dynamics,” Villavarayan added, noting Meritor has a low share in this segment.
Battery costs remain at a premium and charging infrastructure needs to be built out, he said. “The industry needs to drive innovation here so the total cost of operation makes sense.”
New wins mentioned during the call included:
- A supply agreement with Beijing Foton Daimler Automotive Co., Daimler Truck’s joint venture in China. Meritor will produce a custom version of longhaul tandem and single rear-drive axles for Daimler’s heavy-duty on-highway tractors, which will be produced in Beijing by BFDA. Meritor axles produced as part of this agreement will be mounted on the new heavy-duty Mercedes-Benz tractors specifically manufactured for the China market.
- Its Blue Horizon 14Xe integrated ePowertrain for the next-generation all-electric school bus from Thomas Built Buses. It marks Meritor’s first electric vehicle production award with a Daimler Trucks North America brand. The intended agreement will span five years and is expected to start in January 2024.
- It will supply its Blue Horizon 14Xe ePowertrains to Hexagon Purus for a near-term development program with the intention of taking the program to production. Meritor’s ePowertrain will be used in two different hydrogen fuel-cell electric vehicle applications in North America. These applications include a Class 8 drayage truck and yard hauler.
This announcement follows Hexagon Purus and Meritor partnering to integrate the 14Xe ePowertrain into Hexagon Purus’ Classes 6-7 trucks and Class 8 (6x4) vehicles.
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Looking ahead, some truck makers will still be interested in vertical integration of electric trucks, said John Bennett, chief technology officer at Meritor.
“That is the space we play in today with drive axles and are successful primarily because we offer better solutions,” he said. “We are focused on differentiating on the technical side, whether it be efficiency, packability, weight, the automotive-grade software and controls — just providing a better product than they could potentially develop in-house.”
Bennett noted ePowertrains have up to 2.5 times more gears than traditional axles,“up to 23 gears.”
Meanwhile, the competitive landscape on the supplier side includes Dana Inc. and Borg Warner, whose chief financial officer, Kevin Nowlan, most recently held the same post at Meritor.
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